Actually, if you look at the Carter years and compare it to now, it looks to me like we're headed for stagflation and that is a very well known territory to some of us that lived through those times.....
I remember them too. But the difference that I'm pointing out is that we're dealing with LOW interest rates. I actually remember my mother having a number of CDs in banks that were earning more than 18% interest rates. CDs were actually pretty good places to park money back then. Today a CD will typically pay less than 4%, and every drop in interest rates hurts savers more and more. The low interest rates seem to be designed to spur borrowing and spending, and to discourage saving and investment. But as I mentioned, many lenders will be more hesitant to loan the money out.
Mark
Yep, that is a key difference, but one that cannot last much longer. However, similar to the Carter years, the Fed has painted itself into another corner. What happens when the next interest rate cut doesn't do the trick? Stagflation. I think it's unavoidable at this point. The market must be allowed to correct itself, and without all this intervention in the name of lowering inflation and attempts to avoid a deep recession. The Fed has screwed the pooch in a big way and Congress, with their "risky schemes" isn't helping one iota. Couple that will all the "doom and gloom" talk in the media and the average Joe who isn't paying much attention will hunker down, further deepening the mess we're in. There are a couple of bills floating in Congress at the moment that would extend credit card like banking regulations to the mortgage industry. If that happens, hello 30% mortgage interest rates.
The Fed is delaying the inevitable, while at the same time making the resulting impact far worse than it would have been if they'd have just let the market correct itself and weed out the deadbeats.....I, for one, am and have for a while, been preparing for the worst, but "hoping" for the best. My houses, my farm, all my airplanes, my cars, everything I own is paid for. I can feed myself and my family from my farm. I don't know what the city folk are going to do. There's a storm coming. It's not quite here yet, but it's coming......